Apart from the obvious cost of the purchase itself, there are several other related expenses involved in both buying and selling real estate. If left unbudgeted for, buyers and sellers could find themselves in a compromising position.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, advises buyers and sellers to speak to a real estate professional to get a full picture of all the costs involved. “Each sale is different. Having an experienced professional at your side to help guide you through the process of buying and selling can prevent you from making some costly mistakes,” says Goslett.
As an outline of the types of expenses that occur during the sales process, RE/MAX of Southern Africa explains some of the typical expenses that buyers and sellers will have to cover:
Compliance CertificatesSellers will need to pay for the various compliance certificates (electric, plumbing, gas, beetle, electric fence) required during the home inspection process. If any issues are discovered, sellers will also have to cover the cost of the repairs.
Municipal AccountsTo acquire a rates and taxes clearance certificate from the local municipality (which is a requirement for the transfer to take place), the municipality asks for between two to six months upfront from the seller. This ensures that rates and taxes on the property will be covered while the registration process is underway. Sellers will be refunded if the registration process is completed within a shorter timeframe. Similarly, those who live in a sectional title estate could be charged roughly three months’ worth of levies upfront before the registration of the sale.
Bond Cancellation FeesOnce a seller puts a property on the market, a written letter should be sent to the bank to alert them of an intention to sell. If a seller has failed to do so, they will need to cover the costs involved in cancelling their home loan. Most financial institutions require either a 60- or 90-day notice period, otherwise penalty fees will be charged.
Transfer Duties & Registration FeesAs a rule of thumb, buyers should allow for an additional 8%-10% of the amount of the purchase price of the property for all the other cost involved in purchasing a home. This excludes the deposit and covers costs such as Registration and Transfer Fees.
Transfer duties are calculated based on the value of the property (visit the SARS website to find a full breakdown of these costs). Buyers will be provided with a proforma statement of costs when they meet with the transfer attorney to sign their transfer documents. These costs include property transfer costs, deeds office fees, post and petties, FICA, and other fees. You can get an online estimated calculation of these costs beforehand by visiting the BetterBond website.
Moving costsOnce the deal is finalised, buyers will need to factor in the cost of moving all their possessions into the new home. Even if the buyer does not plan on using a professional moving company, there are likely to be some costs involved. Unless a buyer has a trailer or a bakkie or can borrow one from a family member or friend, some sort of transportation cost will be involved. Buyers will also need to source boxes, bubble wrap and packing tape to accomplish the move.
“The costs of buying and selling property can mount up, especially if these are not adequately budgeted for. To make sure these expenses do not catch you off guard, speak to a real estate professional and set aside the money ahead of time. This way you can afford to make these payments as and when they arise without taking on any additional forms of debt,” Goslett concludes.